Developing countries argue that these market-rate loans increase debt rather than help them fix climate change issues
Developed nations, including Japan, France, Germany and the US, are benefiting big in economic rewards from a global program meant to aid developing countries in tackling the effects of climate change, points out a Reuters review of the UN and OECD data.
Developed nations pledged to give $100 billion a year to poor nations to help them cope with extreme weather and reduce emissions.
The report says rich nations have offered at least $18 billion in market-rate loans—$10.2 billion by Japan, $3.6 billion by France, $1.9 billion by Germany and $1.5 billion by the United States—to poorer countries under the climate finance program.
Developing countries argue that these market-rate loans increase debt rather than help them fix climate change issues. They say the norm is to offer low or zero-interest funds.
Also, these loans come with strings attached.
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Japan required recipient countries to hire companies and purchase materials from the lending nations.
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Several donor countries want their nonprofits and public agencies to be involved in the recipient nation’s climate projects.
Analysts argue the approach funnels money intended for developing nations back into wealthy ones, undermining the goal of building resilience and technology in vulnerable countries.